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Executive Order: Project Labor Agreements for Federal Construction Projects

On Friday, February 4, 2022, President Biden issued an Executive Order: Project Labor Agreements (PLA) for Federal Construction Projects, which requires the federal government to require a project labor agreement (PLA) before awarding any “large-scale construction contract,” defined as a contract for which the estimated cost is $35 million or more.  The EO’s effective date is immediate, but some delay will necessarily occur before implementation, as the Federal Acquisition Regulatory Council must propose appropriate regulations by June 4, 2022, and the Director of the Office of Management and Budget must issue related guidance.

The EO does not require construction companies to unionize, it only binds a federal construction contractor’s employees to the terms of a PLA.  PLAs must always contain: (1) guarantees against strikes, lockouts, and similar job disruptions; (2) prompt, mutually binding procedures for resolving labor disputes; (3) mechanisms for labor-management cooperation on “matters of mutual interest and concern, including productivity, quality of work, safety, and health”; and (4) terms that fully conform to federal law, regulations, other executive orders, and Presidential Memoranda.

There are a few exceptions to the PLA requirement and the EO will not mandate a PLA if doing so would:

  • Substantially reduce potential bidders,
  • Otherwise be inconsistent with federal law, or
  • Would result in inefficiency, such as projects of short duration and lacking complexity, only involving one craft or trade, or involving particularly specialized construction work.

A PLA will not be required based on unusual and compelling need, and other factors deemed acceptable by senior officials in federal agencies.  No procedure has been announced for determining whether a project may be subject to an exception.  The EO will not travel downstream to projects controlled by state and/or local governments, even if those projects receive federal funding; therefore, the EO will not affect the majority of projects that will be undertaken by state and local governments regarding the recent Infrastructure Investment and Jobs Act (2021).